Prediction: Over the Fiscal Cliff

Nov 21, 2012

RUSH: Susan Estrich, who ran, by the way, the campaign for president Mike Dukakis in 1988, is now a lawyer, a law professor at USC. She’s a commentator on Fox. She also has a syndicated column. And in her most recent syndicated column, she’s alarmed. She is worried about Obama’s tax policy. The title of her column is, “The Mandate to Raise Taxes on the Rich.” She lists all the reasons she voted for Obama.

“I voted for him because I know how hard it is to buy health insurance for a single person. In the case of my nanny, housekeeper, dear friend, it was gastritis,” preexisting condition, and she couldn’t get insurance, but now she can. That’s why I voted for Obama.

“Years after I stopped worrying about unwanted pregnancies, I did not want to risk Roe v. Wade. I was appalled that contraception could even be an issue. I believe that whoever wants to marry should have a right to do so regardless of their sexual orientation. I voted for Obama because I worry about cutting back on environmental regulation. I voted for Obama because I believe local schools need help from the federal government, because I believe we are one country, and that if there is an earthquake in California, we will need as much help from our fellow states Â— which is to say the federal government Â— as New York and New Jersey do in dealing with the aftermath of Hurricane Sandy.” I voted for Obama ’cause how well he fixed that aftermath. I added that. She didn’t actually write that.

“I voted for Obama because he ended the war in Iraq and is committed to ending the war in Afghanistan. I did not vote for Obama because I think I am paying too little in taxes.

Like many people I know, I am ‘rich’ by Obama’s standards. I pay more taxes, percentage wise, than Mitt Romney and Warren Buffett, because I earn virtually every penny of my income. I work. And yes, all those deductions that allow the truly rich to not work, or at least to not work all the jobs I do, make me angry. I am all for closing loopholes. I am all for ending deductions for things I don’t even understand. But I am not for putting a low cap on deductions that would make it all but impossible for the charities I support to raise funds.”

There’s a couple things coming up here in this fiscal cliff deal. Obama is gonna put a very low cap on the deductibility of the charitable donations. Now, Susan, if I may, I know this is not enough for you to have changed your vote, but this isn’t news. Obama announced four years ago that he wanted to end the charitable deduction. He wants the government supporting every charity. He wants the government getting credit for it and he wants the charities dependent government.

Now, this is not something that was unknown. She also is upset that Obama is going to put a limit on the mortgage interest deduction. She says, “that would mean ‘middle class’ (not rich) people in California would be priced out of the housing market, and the charities I support would not be able to raise what they need to survive.” So now all of a sudden because it reaches her on a personal level, she’s got problems with Obama. See, she likes charitable deductions to all of her big leftist nonprofits that now will probably dry up. And the home mortgage interest, that is gonna do real damage to middle-class people. That’s the only way they can afford to buy homes is being able to deduct the interest on the mortgage. That’s where they get their refund, in large part.

So I find it fascinating. And so now you know what she wants in this column? Now she wants bipartisanship. Bipartisan solutions. That’s right. Now she wants the Republicans to stop some of this. She’s hoping that the Republicans can exert enough pressure to change all of this. “Obama needs to be very careful. Yes, he was re-elected. But so were all those folks who blocked the extension of the Bush tax cuts if they excluded individuals and small businesses … We need to avoid going over the fiscal cliff. But Obama must also avoid the political cliff.”

Susan, if I may, and let me get into my prediction here on the fiscal cliff very quickly. It won’t take much. Not only are we not going to avoid the cliff; it is my contention, I say to you today that the Obama agenda is to go off the cliff. He wants the cliff. And he wants it for two reasons: A, because of the genuine economic damage that it will do, and, B, for the politics of it. What happens? If we go over the fiscal cliff, what happens? Taxes go up. Simply by virtue of the expiration of the Bush tax rates. Taxes go up. They go up on everybody, not just the rich. And as is also a part of the fiscal cliff, defense spending gets cut, which Obama wants. If you don’t believe me, don’t forget that Obama has doubled his request for tax revenue from $800 billion to $1.6 trillion. That’s his opener in his negotiations with the Republicans to stop going over the fiscal cliff.

I’m here to tell you, using my intelligence guided by experience, there will not be any entitlement cuts as part of any cliff deal, because Obama does not want any. The Democrats do not want any. There will be no cuts in the entitlements. And the fact is, I don’t think anybody in Congress wants any cuts in entitlements, either, if you get down to brass tacks. So what’s gonna happen is this: We’ll go over the cliff. We won’t get a deal before we go over the cliff. The tax increases, by the time we have a new Congress sworn in, we’re gonna have tax increases, and we’re gonna have military cuts. This is going to happen, I fear.

But what happens next is the politics. As part of a final deal, Obama, the president, will submit a budget that has a significant tax cut for the middle class, and it will be the restoration of the Bush tax rates for the middle class only. And who will oppose that? Nobody. And who will get credit for cutting taxes? Obama. After he allows them to go up. But it will not be him. It will be the Republicans who refused to deal. Obama will stand fast protecting Social Security and Medicare and Medicaid. I’m telling you what will be reported. Obama is not gonna let the Republicans take this country off the cliff. I am not gonna sit by and let Medicare and Medicaid, health care for the poor and the elderly and Social Security, I’m not gonna let the Republicans cut it. And when the defense cuts happen, we’ve gotta start somewhere, folks, in paring down our budget. And I’ve just gotten us out of two wars. We don’t need to be spending as much on our military anymore.

Remember, the Republicans can’t stop this. The political will isn’t there to stop it anyway. So taxes go up, defense gets cut, and here comes Barack Obama in the first three months of next year with tax cuts for the middle class and I wouldn’t be surprised if he even suggests putting back some military spending, because the Republicans will not oppose either. How can they? So we’re gonna go off the cliff, Obama wants the cliff, he wants to go off the cliff. Look, he said this, he’s telegraphed this. The cliff is the result of a budget deal, a debt deal limit that he was behind. All of this is what he wants. And after it happens and the pain hits, who proposes solutions to the pain? Obama. They will pass, he will get the credit for it, and there will be an agreement that supposedly is related to the cliff, and it’ll happen after all of this takes place so that Obama gets credit for it.

The cliff, in fact, was Obama’s idea. You hear all these Democrats now saying it’s not really a cliff, it’s a slope. You heard that? Dianne Feinstein and others, “It’s not really a cliff. It’s not that bad. It won’t be so bad at first. It’s just a slope. It’s not really that bad.” So that’s what I think’s gonna happen. I don’t think the Republicans are gonna demand tax cuts now. They may make a show of opposing tax increases, but those are gonna happen no matter what with the expiration of Bush tax rates and the further implementation of Obamacare. Yeah, with taxes going up, that will equal new revenue, deficit reduction will be said to be part of what happens here, and cutting military spending, that will be said to be part of deficit reduction. In terms of what’s said, how it’s said, what’s reported, going over the cliff will be said to be positive, in terms of deficit reduction. Let’s just see if I’m right. We’ll know by April of next year if all this transpires.

BREAK TRANSCRIPT

Snerdley asked, “If the taxes go up, how do Republicans get the blame?” They’re refusing to make a deal. So we go all through January and then we go through the motions of the lame duck and there will be discussions of negotiations and so forth, and there won’t be any agreement, and then the Bush tax rates expire, they go up for everybody, and I guaran-damn-tee you that first paycheck of the year, whenever you get yours, it’s gonna be smaller, your net’s gonna be smaller, the taxes are gonna be up. Your take-home pay is gonna be smaller. You’re gonna look at it, “What the hell happened?” and the media and Obama will have the answer, “Well, taxes went up, the Republicans refused to deal with the president. He didn’t want this to happen.”

So Obama will then propose a middle-class tax cut, maybe restoring the Bush tax rates for certain groups, the middle class, certain levels of the middle class, not the rich, of course. And Snerdley said, “I can’t believe no entitlement cuts. Wasn’t that the linchpin of the deal?” Does anybody really believe that a Democrat president is gonna ever preside over anything where entitlements are cut? “Yeah, but, yeah, but they were close to a deal, they were close to a deal and then Boehner all of a sudden left –” yeah, why? Obama, if you’ll remember, raised, again, his demand for taxes to double what Boehner had agreed to, and Boehner walked away. Obama doesn’t want a deal, and there won’t be a deal with a Democrat in the White House that cuts entitlements, unless a new entitlement is created to replace whatever we cut. I’m half serious with this. I’m the mayor of Realville. It is what it is.